What is year-end closure of accounts?

An accounting procedure undertaken at the end of the year to close out business from the previous year, carry forward balances from the previous year, and open posting accounts for the upcoming year. Year-end closing is part of a company’s closing operations, and is used to create a company’s financial statements. How to do year-end closure of accounts using Online VAT Accounting software is discussed below.

Your business’ year-end closing procedures are vital for the success of organization of your company. One of the most important parts of your year-end procedures is closing out the books. You need to start each new year with a clean, fresh slate that is organized and correct and will set you up for success right from the start. Whether you have an in-house accountant or not, some of your year-end accounting procedures will need to be reviewed and taken care of by audit and tax experts. Many companies make significant mistakes throughout the year and while completing year-end procedures, and these mistakes can be very costly in terms of money, time, and overall efficiency of the company. Here are few crucial year-end closing procedures for accounting that your accounting team experts need to complete.

How to do year-end closure of accounts using Online VAT Accounting software ground procedure

Before you start, make sure you do these things for the financial period being closed:

• Call your auditor and/or tax return preparer to discuss what they expect or need from you for the audit and tax filing process.
• Confirm that all revenues and expenses are recorded in the proper time period under General Accepted Accounting Principles (GAAP).
• Confirm that all approvals, authorizations, and signatures have been documented for necessary items, such as bills, contracts, reimbursements, etc.
• Make any journal entry adjustments as necessary, such as depreciation expenses or new fixed assets.
• Reconcile all bank accounts, Fully reconcile your account and ensure it agrees with your actual bank statement balance        credit cards, and money accounts. Make sure balances are equal to year-end statements.
• Invoices – Enter and approve all invoices.
• Bills – Enter and approve all bills.
• Expense claims – Enter and approve all expense claims.
• Payments received – Bank all payments received.
• Confirm that your year-end payroll expenses match up with your monthly payroll taxes .
• Run a year-end report of your taxable sales and confirm that you have paid all the  tax required of your company, if applicable.
• Reconcile taxes paid to FTA
• Prepare fiscal year end trial balance.
• Close out temporary accounts (profit and loss accounts and dividend accounts) to Retained Earnings (or your company’s equity account).

You may think that your tax team is handling the monthly and year-end procedures properly, but you need to ensure that everything is being taken care of in the correct way. The success of your company depends on it. If you have experienced any accounting issues or problems with closing out the books at the end of the year, you need to handle the situation immediately. Unfortunately, accounting mistakes are all too common and happen more often than most businesses care to admit. Some of the most common problems are as follows:

• Only forecasting to year-end, rather than quarterly
• Having too many account codes for profits and loss
• Taking too much time to compile an annual plan
• Reporting on wrong or irrelevant key performance indicators (KPIs)
• Incorrectly reconciling money accounts, payroll expenses, taxable sales, income taxes, and more.
• Incorrectly recording transactions, leading to potential fines/penalties or the closure of a business.

Many of these issues can easily be avoided with accounting expertise and more thorough systems for preparing for a new year and closing out an old year. The best way to handle these accounting shortcomings and others is to SUBSCRIBE an online VAT accounting software to review all of your financial information and handle your monthly procedures, year-end procedures, and any tax and audit preparation that you are required to complete

How to do year-end closure of accounts using Online VAT Accounting Software

Need to upgrade to Reach online VAT  Accounting Software :

Reach Accountant VAT software is well designed to match all the needs for successful running of the business. The software can be used in different industries ,traders ,manufacturers, retailers,  workshop ,business projects etc. It is an accounting software that can automatically manage your book of accounts, taxes, inventory, sales, purchases and more online quickly and securely

Software like Reach online VAT accounting Software  gives you have a web-based way to run your business accounts, plus the ability to store all your expense receipts, invoices and other business documents in the cloud – and that makes your tax year-end far easier to deal with.

Use cloud accounting software throughout the year, the whole job can be far easier.

We’ve highlighted 5 key ways that Reach Online VAT Accounting Software remove the hassle of your tax year-end.

1. Your accounts are online and easily accessible

Using Reach Online VAT Accounting Software moves you away from spreadsheets, scraps of paper and guessing at your financial position and gets you in proper control of your financial destiny.

With a cloud accounting system:

• Financial numbers can be seen in one place– making it easier to see your income and profits through a single dashboard.
• Online invoicing reduces paperwork– so you can send your customers their bill as an electronic invoice direct to their email, cutting out printing and posting of invoices.
• Revenue can be easily seen– which makes it far simpler to know how much you’re earning, and how much tax you’re likely to owe to Revenue & Customs .

2. You can do your bookkeeping as you go

Keeping up to date with bookkeeping and financial admin tasks can be a challenge for a busy freelancer.

Reach Online VAT Accounting Software has a mobile app that can be used on any iOS or Android device. That means you can log your expenses and costs as they occur and keep them recorded in a central place, meaning all your numbers are accounted for, backed up and secure.

With Reach Online VAT Accounting Software on your mobile device:

• Expenses can be added anytime– so it’s simple to record that petty expenses and keying in your transactions intantly.
• Transactions are easily reconciled– Reach Online VAT Accounting Software has a live bank feed, so you quickly see your bank balance and automatically match incoming transactions with the right bill.

Bookkeeping is kept up to date – so the income and costs you see in Reach Online VAT Accounting Software’s profit & loss (P&L) report show your financial position right now – giving you real-time numbers

3. Your receipts are stored in the cloud

Keeping track of every expense over the whole year is tricky without the right record system,with Reach Online VAT Accounting Software you can easily scan your receipts in from a mobile phone app.

With Reach Online VAT Accounting Software as your document storage solution:

• Paper receipts are snapped and recorded – by taking a quick pic of your receipts with the Reach Online VAT Accounting Software Touch app, they’re instantly uploaded into Reach Online VAT Accounting Software – ready to attach with the bill.
• Data-entry becomes automated– with apps like Receipt Bank, Expensify or the new Reach Online VAT Accounting Software Expenses app, optical character recognition (OCR) snaps your receipts and automatically turns the image into financial data that’s pulled into Reach Online VAT Accounting Software.
• Admin time is reduced– using OCR and mobile apps to quickly snap and record every one of your paper receipts, invoices and bills – and saving you hours of admin time.

4. Your accountant can easily see your tax position

Reach Online VAT Accounting Software works in the cloud, so you can invite your accountant to access your Reach Online VAT Accounting Software accounts – giving them a real-time view of your finances from wherever  in the world.

With simple access to your Reach Online VAT Accounting Software numbers at any time, your accountant can easily keep an eye on your income and profits and calculate your exposure to tax – making tax planning advice more efficient and keeping you on top of the tax you’ll need to pay.

With instant cloud access:

• Accountants see the numbers they need– so they can advise you on how much to squirrel away in your tax bank account to ensure you can cover the next tax bill.
• The data is already sitting in Reach Online VAT Accounting Software– meaning there’s no running around at year-end, searching for receipts or tracking down unknown payments from months in the past.
• Completing your tax return is simple– with Reach Online VAT Accounting Software providing you or your accountant with the financial numbers needed to complete your   tax return.

5. You’re ready for Online Year end Accounting.

With a Reach Online VAT Accounting Software online accounting system are

• Accounting data is already in the digital realm– so there’s no need to convert your accounting data once MTD (Making Tax Digtal)affects you.
• Reach Online VAT Accounting Software will supply the correct digital tax return templates– meaning you or your accountant can quickly and easily submit data in the prescribed format by government.
• Your business accounts are future-proofed– so when MTD does take effect, there’s no additional work or outlay to get you compliant and submitting digital returns.

How to do year-end closure of accounts using Online VAT Accounting .

Process the year end

1. Run a VAT Audit. From here you can check that the tax and coding are correct.
2. Run a Trial Balance.

1. Reconcile all accounts on your Balance Sheet:

• Bank account – Make sure any unpresented cheques or payments are correct. Check your imported bank balance in Reach online VAT accounting software  against your actual bank balance from your bank. Use the Bank Reconciliation report to help with this.
• Run an  Receivables Summaryand an  Payables Summary.  Reach OnlineVAT Accounting software  is designed to ensure the balances of your  receivables and payables match your general ledger at all times. Write off any bad debts using the credit functionality.
• Ensure you know what makes up the balance of all accounts in your balance sheet, including loans and fixed assets.

1. Let your accountant or bookkeeper know you have finished entering data so they can log in to your organisation’s Reach online VAT accounting software and review what you’ve done and potentially complete the rest of the process.
2. Your accountant or bookkeeper can add journals and adjustments directly into Reach Online Accounting software if access given. They don’t need to re-key this information.
3. Your accountant or bookkeeper is likely to verify balance sheet items and add entries for:

• Year end manual journals
• Tax liability
• Accruals
• Work in progress
• Depreciation
• Loans
• Sales taxadjustments

Closing and reporting VAT periods

VAT period is automatically closed when the last accounting period in the VAT period is closed. The VAT Liability account is the account that VAT amounts are transferred into when closing a financial period. This is something the program does automatically when running the VAT period end procedure.

Businesses that are liable for VAT are obliged to submit a tax return. This must be submitted by the end of each VAT period, and the frequency depends on the number of VAT periods that your company has chosen to have

Before closing a VAT period

Before you close a VAT period, it is important that you ensure that all entries for the relevant VAT period have been entered and transferred to Financials. It is also important to ensure that all accounting periods in the VAT period have been closed before the VAT period can be closed.

At the end of the first period in a new year and when the previous accounting year has not been completed, you should ensure that the partially closed accounts process has been used before period 1 is closed.

In Reach Online VAT Accounting software there’s no need to do a specific year end journal to bring the profit and loss balance.Reach Online VAT Accounting software reports are created in real-time and in the case of the Profit and Loss report it is run directly off the year-end date you’ve specified in Reach Online VAT Accounting software. So on any date the report is run it will be from the start of the financial year. Once the new financial year starts, as long as you haven’t entered any transactions into Reach Online software for that year, the Profit and Loss report will show 0.00.

Move to the cloud and get your finances in order

If you’re looking to make your year-end   as straightforward and simple as possible, there’s real value to moving your freelance financial management over to Reach Online VAT Accounting Software.

Not only do you get a efficient online way to manage your finances, you also reduce your bookkeeping workload and make tax year-end a more manageable task.

Reach Online VAT Accounting Software also has a huge resource of small business guides that will help you refine, improve and grow your business too.